Medicaid: the assault begins

The most important article I read over the weekend was this one, in Saturday's New York Times, about some new goings-on in Texas:

Some Republican lawmakers — still reveling in Tuesday's statewide election sweep — are proposing an unprecedented solution to the state's estimated $25 billion budget shortfall: dropping out of the federal Medicaid program.

Far-right conservatives are offering that possibility in impassioned news conferences. Moderate Republicans are studying it behind closed doors. And the party's advisers on health care policy say it is being discussed more seriously than ever, though they admit it may be as much a huge in-your-face to Washington as anything else.

"With Obamacare mandates coming down, we have a situation where we cannot reduce benefits or change eligibility" to cut costs, said State Representative Warren Chisum, Republican of Pampa, the veteran conservative lawmaker who recently entered the race for speaker of the House. "This system is bankrupting our state," he said. "We need to get out of it. And with the budget shortfall we're anticipating, we may have to act this year."

So we are now talking about the dismantling of the welfare state in very specific and concrete ways. This is new, and it foretells a fundamental fight that's coming and perhaps soon. First, some background.

Medicaid provides basic healthcare to poor people. It was passed in 1965 along with Medicare, which provides healthcare to seniors. Medicare is a federal-only program. Medicaid is a joint federal-state effort, meaning states contribute a percentage (usually maybe 20 to 40% or so, varying from state to state) of the costs.

Medicaid was designed this way in part because Wilbur Mills, the moderate/conservative Democrat who chaired the House Ways and Means Committee at the time, thought that (and let's face it, not unreasonably) if the feds picked up the full costs of care for both groups, it wouldn't be long until we had an NHS. This was at a time, remember, when far more legislators (and Americans generally) would have been inclined to back such a thing).

The states' share of Medicaid costs has been an immense burden for two decades, there's no denying it. I remember Mario Cuomo complaining about it when he was governor, when I first started covering politics in New York. Cost have risen and risen. States set their own reimbursement rates to doc and hospitals, which vary wildly. And yet, Medicaid generally pays primary care physicians only about two-thirds as much as Medicare does.

Now, we bring in the new healthcare bill. It will expand Medicaid vastly and rapidly, by offering subsidies for the purchase of coverage for everyone up to 133% of the poverty line. The feds are going to cover all of these costs through 2019, and 90% thereafter for a bit. But states fear, and again not unreasonably, that over time their Medicaid commitments will expand.

Remember the Cornhusker kickback? This is what it was about: Nebraska's Ben Nelson wanted an amendment ensuring that Nebraska would not be responsible for covering future Medicaid increases. Right now, states spend on average about 20-25% of their entire budgets on Medicaid - obviously, higher in states with larger poor populations.

Liberals have been aware of these problems, which is why liberals and Democrats have proposed that the feds fully pick up the cost of Medicaid. In the context of the federal budget, it's not as much money as you might think: Tim Noah of Slate in this article says $25-$30 billion. That's not nothing, but it could be a findable amount of money in the context of a nearly $4 trillion budget.

Now, there's another proposal squarely on the table. Just stop doing Medicaid. Stop providing coverage for poor people. Nearly 60 million Americans get their care through Medicaid; this includes roughly one-quarter of the nation's children.

If Texas followed through and opted out of Medicaid, I doubt it would mean that no poor person in Texas could get treatment. What it would mean is that without the state's contributions, reimbursement rates would fall even lower, and presumably many more doctors and hospitals would stop treating poor people for all but the most basic-maintenance conditions.

I see little reason to think Texas won't do this eventually. It saves billions; it's a way to confront Obamacare; and after all, poor people vote Democratic, when they vote, and Texas is run by Republicans. And I see little reason to think that other states, especially in the south but potentially all over as long as Republicans have enough control, won't follow suit. Southern states, unsurprisingly, have higher percentages of Medicaid enrollees, since they're poorer on average.

It is certainly true that Congress over the years has expanded Medicaid eligibility. Conservatives see that as drunken-sailor spending. I would say that Congress has stepped in to fill gaps discovered in the private-insurance system, as costs began to go through the roof and private insurers began tightening eligibility requirements and saying no more often. Medicaid is also designed to cover more people during economic downturns.

So a very fundamental fight is coming here. The odds, especially after last Tuesday's results, are that the conservatives will win. We've been reading for years that, of Medicare, Social Security, and Medicaid, it was likely that Medicaid would fall first, because the other two programs aren't means-tested; they serve middle- and upper-income people, so they'll probably survive. But Medicaid...

No solution is easy here, and I won't pretend that just lecturing you about millions of sick children can make the money appear. But what Texas is looking into is a solution to other problems, political and fiscal ones, not the problem of public health, of which it's apparently just washing it hands, if this comes to pass.